Buy? or Rent?

when someone tells me about buying houses, i just throw a smile. but inside my head i keep on asking, why should buy, instead of rent? maybe because of the feeling of having something that's all yours. or maybe because of its appreciating value in nature over time.

either from old folks or the youths, the common advice is buy a house as soon as you can, renting is just a throwing-money device. i don't really agree with the suggestion and here's why:-

1. renting is flexible.
you can move out anytime with little penalty (if available). when you own a house, selling out can take a very long time. it's maybe suitable if you're 55year-old but if you are 25year-old, career might require mobility. isn't it? so why put your root down at a place you just stay for temporary; 5yrs? or most of 25yrs?

2. owning a house is more expensive.
renting a house will throw your money and you'd never gain the ownership of it. but, owning a house is also throwing your money in taxes, fee, etc- those would not go towards the equity of your home. even if you're no longer staying in the house, you still have to pay. if you rent out your house, you still have to pay the loan which is significantly higher than rental price if you owned landed properties; esp. true for landed properties.

3. you'll stranded for about 30 years.
when you buy a house (let say you take full loan), you have to commit your monthly salary for an additional of RM300-RM500/month compared to rental for the next 25-30 yrs . if extra rm500 been invested with return more than 10% p.a., you'll easily claim rm8724 by end of 30th yr.

4. someone else do the repairs
when you own a house, if something breaks down (-paip pecah la, toilet sumbat la, atap bocor la, etc), you have to fix it by yourself. but if you rent, hopefully your landlord will do all the repairs, no charge to u!!! again, you can use your money to invest in something else...

5. treat housing market as other markets.
housing price will also depreciate in value, just like any other market.

owning a house is not like investing in EPF, it is a life changing decision with 30yrs commitment. it may change your life significantly, but not now. you may think owning a house is a fun thing but when you come across financial planning concept, soon enough you'll reveal the true myth about buying or renting.

Asset? or Liability?

it is understandable that asset is a useful or valuable quality thingy. something that has appreciate value in the future. while, liability is something that hold your back.

when i was a teen, i used to have a funny definition about asset (which i was confidently 'right' that time). easy, asset is something you own, something big and valuable for you. such as, your house or your land or even your car.

as i left my teen age, i came across that my definition about asset was totally wrong. it came from my discussion with my hubby, my father in-law and asset-collector-guru, azizi ali. it's not your house, or your land, or any big thing you own. asset is something that brings money into your pocket.

it made me realize that my house won't fill my pocket with money, even it takes money from my pocket. or even my land. i have to get my money out everymonth, for billing, taxes, and so on. how can i accept that my house would be my asset? maybe that's the answer why i don't buy any house.

it's not about having lots of houses but where the houses are. robert kiyosaki didn't simply buy any property without knowing the location and the potential of it. i won't buy any house in miri, neither buying a house at KL/KB while i am at miri. simple, no value added. if i buy a house at KL, i have to pay the price monthly (i don't have cash to pay it fully) and still have to pay the rent here. easy way, rent it out, but i don't believe it is that easy. i saw many in my very family, rent out houses, in KL, JB, etc. end up with unpaid rent for months and the tenants disappear. if i buy i house here, when i wanna move out then what? rent out? sell out? in this very city, where the development is still not very rapid (yet), i don't think i could sell at higher price. many and many new housing areas developed, if i was them, i would buy a new one rather than get other's house. again, will i sell at lower price? so what i'm gonna get?

maybe i am not really get into real estate yet. but there is rule of thumb, do something with value added. i don't buy any land or any house, because it will make me committed to and my monthly salary have to go to there first. meanwhile, i can do many things with my money. i can save it or invest in unit trust to get more return. yeah, it is no doubt that property investment would bring more into you pocket but as a layman like me, i don't have knowledge about property. i don't read much books and i don't even have money to buy land!

easy, with not much money, not much saving and not much knowledge about investment, find another vehicle to rig your asset up. your asset is your brain. equip the brain with financial knowledge, would make it smart enough to decide. the best investment in to invest in ourselves.

since i don't have much knowledge and experience in stock market, i just go for unit trust. easy, find a company that would provide return more than inflation rate per annum. easy and convenience, diversified investment reduces risks of losing money.

buying land/house for others (like what azizi ali did) makes your properties your asset. but buying land/house for your own usage won't be your asset. unless you sell it someday. if want to have a property to be sold/lease, study the location. nobody won't rent your shop/house if you have it at a swamp area. and always believe that rumors is always rumors. my FIL's friend was confidently bought a property at a place which was popped to be a potentially growth new-satellite town. but until now, nothing happen and he is filthy paying for the price, which my FIL & i believe that he would get better if he bought someplace else.

maybe someday, when i have enough money, i'll buy a terrace house at Damansara, renovate and sell it at exponentially higher price as what donald trump did. hopefully an-unrenovated house still available that time.